Good news yesterday for Merck KGaA, which is planning to develop a major biopharmaceutical production plant at its headquarters in Darmstadt, Germany. But it wasn’t such a good day for fellow German firm BASF, which is cutting a swathe of jobs at its production site in Minden to counter intense competition in the market for pharmaceutical active ingredients. The news came as Bayer too said it plans to downscale its crop science business, cutting 1,500 jobs, after poor performance in its second-quarter results impacted on its overall financials.
Merck’s plant will be used to manufacture cancer drugs at a cost of 190 million euros – the second largest single investment ever made by the company. First on the production line, which is expected to commence in 2010, will be its top-selling monoclonal antibody Erbitux (cetuximab), which it licensed from ImClone Systems and markets outside the USA for treating colorectal and head and neck cancer. The new plant will create almost 200 new jobs.
Meanwhile, BASF will see a loss of 200 jobs after announcing plans to downscale production at its Minden site. “The decision to streamline the workforce was not easy for us. However, it is necessary if we are to make the site profitable again and safeguard the remaining jobs,” said Roland Minges, Managing Director of the operations, saying that increased cost pressure from Asian suppliers “has led to an unsustainable situation in earnings…aggravated by a significant decline in demand for essential active ingredients produced at the site.” The restructuring is expected to be complete by the middle of next year.
Finally, second-quarter sales of the Bayer CropScience division declined 1.6% to 1.57 billion euros in a difficult market environment, and the company is forecasting a further decline for the full year. It hopes the new cost-cutting measures will give it 300 million euros a year in savings, about half of which will come from job cuts and consolidation of production sites. The restructuring, which will have the majority of its effect in North America, is due to complete by the end of 2009.
